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Biotech / Medical : Incyte (INCY) -- Ignore unavailable to you. Want to Upgrade?

To: LLCF who wrote (1370)	3/15/2000 2:23:00 PM
From: Lighthouse	Read Replies (2) \| Respond to of 3202

Certainly a retracement of some fast money. My only concern about the stock/stock price was the notion of how long it would take to commercialize INCY's IP position. I believed that people were being overly generous in capitalizing these future streams . .. today . . .. at very low discount rates. I exited early - but a few facts have changed since I left and I would apprciate anyone's comments on the following (or any other) matters: 1) INCY management gets my gold star award for capital raising. Remarkable is an understatement. Essentially we raised apx. $600,000,000 in cash in return for giving up a small percentage of the equity base. I would ear mark this as a case study in self preservation/independence/fisrt mover category. Implications: 1) INCY management has money to burn on new projects (with this team that has been a winning proposition). Not only can INCY further its lead over present competitors, but it effectively keeps others out. I point to the following examples: R&D for 2000 is forecasted at $182,000,000 and they can keep growing that number going foward. If the big pharma's wanted to compete head to head it would require dilution to their future EPS streams. They are already about to wheather the great patent expirations of 2000-2004, so I bet all the low hanging fruit of cost savings are earmarked. Biotech cannot touch this R&D number. Look at the total R&D of BGEN, GENZ, IDPH, IMNX et all and then look at that $182,000,000 again. This field is increasingly belonging to CRA, INCY, HGSI, MLNM and others. 2) We have created 'option value' The field is young and moving, SNP's look like the next playground, but no one really knows. However, with the war chest and stock price INCY can get into any field that they are not already in. That is option value and they did not have this before. Remember PFE prepaying all their future royalties to INCY back in November. Well INCY needed the cash. Now they do not. PFE should be happy they paid when they did. 3) I may be dense but for the first time I have seen published reports of the value of INCY's future royalty streams. INCY's ex CFO had projected the NPV of those streams, but the company never wanted to talk about it. No hyping and please no lawsuits. Well Alex Brown (2/23/00) says the NPV of future royalty streams is worth $165 per share today. I am amazed! That is much higher than I have factored in. So let the geers begin and damn be he/she that first crys "Hold Enough" Cheers,

To: LLCF who wrote (1370)	3/15/2000 2:54:00 PM
From: RCMac	Read Replies (2) \| Respond to of 3202

>> the gene patent issue << There is a (mostly inactive) SI thread re biotechnology patents: Subject 27298 >> at least INCY has a business model with or without the patents... << INCY has a tremendous business model quite apart from the uncertain value of its patents. See: Message 8446046 and the discussion following. In that old post, I said some things that I think are still entirely or largely true about INCY [additional comments today, in brackets]: "First, INCY's right to future royalties for drugs developed by its big pharma partners with INCY IP and reagents doesn't depend on the validity of its patents. Instead, INCY has a contract right to those royalties, not a right based on patent. A ruling by the Supreme Court that DNA sequences are not patentable [pretty unlikely, I think] would hurt INCY in a number of ways, but would not seriously curtail the royalty stream based on prior contracts." [These contract rights arise, under INCY's master agreements with its pharma customers, whenever the customer wants not only the info in INCY's databases but also a sample of the gene; the customer orders this from INCY's "clone-by-phone" site in St. Louis, and gets it by FedEx. The recent WSJ article gave the number of these at above 30,000 - i.e., 30,000 chances at a 1 - 5% royalty on a drug developed by the pharma as a result of INCY's services. The WSJ quoted Astra-Zeneca as saying about 50% of its pipeline derives from INCY sources. Someone want to put a value on this contingent stream of royalties?] "Similarly, INCY's current main business of selling, on multi-year multi-million dollar contracts (1) access to the proprietary databases INCY has amassed and continues to expand, and (2) the right to use INCY's software to manipulate both INCY's and other (public) databases, doesn't particularly depend on its patents. Instead, it depends primarily on having better software and a useful set of databases. (Rocketman, please set me straight if I've got any of this wrong.)" "Third, the Patent and Trademark Office apparently has no doubts about the patentability of genetic sequences, either whole genes or part-gene sequences - they have issued a large number of patents on such sequences, in 1996 issued detailed guidelines for applications for such patents, and November issued the first of (I believe) 44 patents on EST partial gene sequences." [The Blair/Clinton statement of yesterday effectively reaffirmed the validity of the current system of patents. They don't have the power to change it in any event, and the President didn't say anything remotely like: "Tomorrow we will send to the Congress a bill abolishing gene patents." Quite the opposite.] "Fourthly, the Court of Appeals for the Federal Circuit (the "CAFC") also appears to have no doubt as to the validity of such patents. It has ruled on various disputes concerning DNA patents without any serious question of the patentability of genetic sequences - the cases I've seen so far deal with other technical questions under the patent law, such as adequacy of description or priority of invention, but not the overarching question whether a genetic sequence is patentable (although it should be noted the parties to these cases had no incentive to challenge such patentability and raise the issue before the court). [The CAFC is the intermediate level appellate court (i.e., above the district courts and appealable only to the U.S. Supreme Court) which handles appeals in all patent cases - specialist judges, not "generalists" like the district courts or the Supreme Court.]" (The post also has a number of useful links to various patent and biotech patent materials.)

To: LLCF who wrote (1370)	3/15/2000 11:18:00 PM
From: JF Quinnelly	Respond to of 3202

Incyte backs Clinton/Blair gene initiative PALO ALTO, Calif., March 14 (Reuters) - Incyte Pharmaceuticals , which stores information about human genes, backed an initiative by U.S. and British leaders on Tuesday calling for free access to raw data on gene mapping. Earlier Tuesday, U.S. President Bill Clinton and British Prime Minister Tony Blair called research into the human genetic blueprint, "one of the most significant scientific projects of all time. "To realise full promise of the research, raw fundamental data on the human genome, including the human DNA sequence and its variations, should be made freely available to scientists everywhere," the two leaders said in a joint statement. Incyte, whose shares fell 53-1/2 to 143-1/2 on Tuesday, said the Clinton/Blair initiative favored intellectual property rights for gene-based inventions. Shares of other companies that hope to profit from genomics information also fell sharply. "This data is of tremendous value to Incyte and our customers. By combining this information with Incyte's industry-leading databases, our subscribers will glean meaningful information about the genome," said Incyte President and Chief Scientific Officer Randy Scott. ((--Nigel Hunt, Los Angeles bureau + 1 213 380 2014)) -------------------------------------------------------------------------------- --------------------------------------------------------------------------------